Networking, entrepreneurship and microbusiness behaviour

Abstract

It has been argued that networking by owner-managers of small businesses will enhance business performance. Yet to define and demonstrate the presence of networking activity is suffused with methodological difficulties. In this paper the authors attempt to disentangle some of these difficulties. The paper draws on quantifiable data from 104 owner-managers and qualitative data from 34 critical incident interviews from a study of microbusinesses to assess the nature and extent of networking activity. The paper shows: a high proportion of owner-managers use their trading contacts as sources of useful additional information; they use ‘weak ties’ for purposes such as recruitment; a sparse use of institutional networks; an association between networking activity and business performance, although it seems that this must be qualified by sectoral differences; an association between type of owner-manager on a scale of entrepreneurship and networking activity. The policy implications of this paper suggest that economic development agencies continue to have problems reaching out to the microbusiness. This paper recommends that such agencies might use a tool to differentiate more finely amongst the microbusiness population.